Teachers union gives big boost to pension-smoothing plan (UPDATED)

As they fight Gov. Andrew Cuomo in court on the state’s property-tax cap, New York’s largest teachers union is backing his proposal plans to smooth pension costs for local governments and school districts, urging its members to ask their legislators to support it.

In an email Tuesday to members, New York State United Teachers Executive Vice President Andrew Pallotta said Cuomo’s a pension-smoothing plan is a “practical solution” to prevent short-term spikes in contribution rates. NYSUT members occupy three spots on the 10-member board that manages the New York State Teachers Retirement System, an $88 billion pension fund.

But the teachers fund is controlled by the 10-member board, which includes the three current NYSUT members and one retired teacher.

“If left unchecked, a cost increase of this size would devastate school districts and force further program cuts onto our student population,” Pallotta wrote. “Pension smoothing could be the solution.”

UPDATE: NYSUT spokesman Carl Korn points out the union supports a pension-smoothing plan, but not necessarily Cuomo’s plan. The union is “still studying the pros and cons” of Cuomo’s proposal, Korn said.

Cuomo’s plan remains the only smoothing option that has been proposed this year.

Other labor unions, however, have expressed concern with Cuomo’s plan. The state Civil Service Employees Association, New York’s largest public workers union, called Cuomo’s proposal a “a bait and switch scheme … that will allow public employers to underfund their pension obligations.”

Pallotta’s full letter — it kicks off with a joke — is after the jump.

What do James Bond, fine silk, and 20-year-old Scotch all have in common with the solution to temporary pension cost spikes?

One word. Smooth.

Take action now at the NYSUT Member Action Center to encourage lawmakers to allow school districts to “smooth” temporary pension cost spikes!

Pension smoothing is a practical solution to the short-term spikes in the required employer pension contribution rate that happen from time to time. In 2013-14, that spike could increase school district pension payments so dramatically that it could eat up the lion’s share of the $889 million increase in school aid included in the Executive Budget proposal.

If left unchecked, a cost increase of this size would devastate school districts and force further program cuts onto our student population. Pension smoothing could be the solution.

Take action now at the NYSUT Member Action Center to encourage lawmakers to allow school districts to “smooth” temporary pension cost spikes!

In much the same way that state and localities have utilized amortization to smooth out the temporary pension cost spike, school districts should be afforded the same financial tools to help mitigate their costs. That could save education jobs, alleviate program cuts and increase investment in education across the state.

Take action now at the NYSUT Member Action Center to encourage lawmakers to allow school districts to “smooth” temporary pension cost spikes!

In solidarity,

Andrew Pallotta
NYSUT Executive Vice President

P.S.: We’ve had enough of “slick” in Albany. It’s time for “smooth.” Please help!